What is Forex Trading? Basic Things You Need To Know
Looking for online part-time jobs, Nigerians often come across such a thing as Forex. They are promised big earnings with minimal investment, while anyone can trade and earn on this platform, even without experience in trading in the stock markets. Seems like a lie, doesn’t it?
But what is Forex trading, and how does it really work? Let’s try to figure it out in this article.
What is Forex, in simple words?
Forex (foreign exchange market, or FX) is a market where online traders can exchange currencies in real-time. The fact is that currency quotes in relation to each other are constantly changing, which allows you to earn on their changes.
The main currencies traded on Forex are:
- the US dollar;
- British pound;
- Japanese yen;
- Swiss francs.
And the most popular trading pairs are:
- Euro/US dollar;
- Japanese yen/US dollar;
- British pound/US dollar;
- US dollar/Swiss franc.
However, you can also trade cross-rates: these are pairs that do not contain the dollar (USD).
How does Forex trading work?
To make transactions, you will need a trading platform, which is also called a terminal. This is a convenient program that is available both in the browser and as a mobile application. It can also be installed as software on a computer or laptop. In simple terms, you just need to open the platform and click the “Sell” button if you think that you can earn on a decrease in the price of a particular currency. If you think that the rate should grow, then you should click the “Buy” button.
Advantages of Forex
We figured out the meaning of Forex, as well as the nuances of trading in this market. And now, let’s look at the main advantages of Forex trading:
- Availability. Any person who has a minimum starting capital and a device with Internet access can trade on Forex.
- Free work schedule. The market is open 24 hours a day, 5 days a week. A trader can choose a convenient schedule for them and trade at any time.
- High liquidity. The daily turnover of the Forex market exceeds 3 trillion dollars, so traders have the opportunity to operate with huge sums of money.
- You don’t need a lot of start-up capital. It only takes a few dollars to start trading. Starting with small amounts, you can gain the necessary experience and understand how the market works. To quickly increase the deposit, a trader can use leverage – the broker’s funds that allow you to open deals of a larger volume.
- Wide selection of tools. Traders can trade dozens of different currency pairs, which opens up great opportunities for them to earn money.
It should be understood that earning big money on Forex is quite difficult. For large earnings, you need huge capital because fluctuations in rates are minimal, and even when buying a currency for several thousand dollars, at best, you can earn a maximum of $ 5-10. For this reason, experienced traders make large investments, and only this helps to earn.